Warner faces 14 download overcharging cases
Stock exchange filing
Documents filed with the Securities and Exchange Commission on Friday reveal that Warner Music Group is facing 14 separate legal actions relating to the pricing of downloads.
In December last year and February this year the company received requests for information from New York Attorney General Eliot Spitzer. In late February it received a Civil Investigative Demand as to whether pricing of downloads breaks the Sherman Act.
The filing says Warner has been named in 14 cases - eight in California, five in New York, and one in Washington DC. It expects the cases to be consolidated into one. Although, thanks to iTunes, the US price of 99 cents per track has become an "industry standard", several competition authorities have questioned how this price was arrived at.
The company warns that any legal action, "regardless of the merits of the claim, could be costly and divert the time and resources of management".
The filing says the recorded music industry has had an unstable five years. It says: "The industry-wide decline can be attributed primarily to digital piracy."
Warner is also facing two anti-trust cases filed by independent music labels over its radio promotion behaviour - the company settled an investigation into radio promotion by Attorney General Spitzer in November and paid $5m to charity.
The filing also warned that Warner Music's outside auditors have identified a "material weakness" in the way the company works out domestic royalty payments. The company has started work on integrating different systems in use, but warns that there remains a "remote likelihood that a material misstatement...will not be prevented or detected".
Read the whole filing here.
It also emerged over the weekend that EMI is likely to increase its offer for Warner to $4.4bn and offer a higher percentage of cash. Warner last week rejected EMI's offer of $4.2bn for the company.
More from the Mail on Sunday here.®
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